The eurozone’s 17 finance ministers agreed on Monday on how to finance the region’s future bailout fund, slightly lowering the contributions that poorer states have to pay into it.
Nations that use the common euro currency will give the new European Stability Mechanism (ESM) a capital base of 80 billion euros (US$114 billion) and provide 620 billion euros in callable capital and guarantees, European Commissioner for Economic and Financial Affairs Olli Rehn said.
The ESM is set to start in mid-2013, succeeding the eurozone’s existing bailout fund, which is the European Financial Stability Facility.
REASSURANCE
European policymakers hope that the existence of a rescue mechanism for countries that run into financial trouble after 2013 will help to counter any remaining doubts about the credibility of the euro.
Investors were keen to know the details of the future fund amid doubts that Europe will have solved its debt crisis — which has already pushed Greece and Ireland into multibillion-dollar bailouts — by 2013.
The 80 billion euro capital base allows the fund to act more like a bank, giving additional security to its creditors. The callable capital and guarantees would only have to be paid if a bailed-out country fails to repay its loans.
OVER-CAPITALIZATION
The 700 billion euros in overall contributions will give the ESM an effective lending capacity of 500 billion euros.
The over--capitalization is necessary to get a good credit rating for any bonds the fund issues, providing extra security in case any of the countries that are -currently contributing run out of money.
Ministers also decided to tweak the formula to calculate each state’s contributions, giving economic output more weight than population and thus slightly lowering the burden on poorer countries.
That follows demands by 10 poorer eurozone states, including Slovakia and Malta, which felt they were carrying an unfair burden compared with their economic strength.
German Finance Minister Wolfgang Schaeuble, who until earlier in the day had opposed changes to the formula, said the tweaks were so minimal — changing his country’s contribution by less than 0.1 percentage point — that all finance ministers were able to agree.
On top of that, countries that receive aid from the new fund will pay interest rates that are, on average, 1 percentage point lower than rates in the current bailout fund.
Ministers did not make any final decision as to how they would increase the lending capacity of the current fund, which they plan to increase from about 250 billion euros currently to 440 billion euros.
Schaeuble said the increased capacity would most likely come from countries raising their guarantees, based on the old contribution formula.
The ministers also left Ireland waiting for a decision on the interest rate it has to pay for the 67.5 billion euro rescue loan it received in November last year. Schaeuble said Ireland was not discussed and he was still waiting to hear what the country had to offer in return for a better interest deal.
The final decisions on the new fund will come at a summit of EU leaders tomorrow and on Friday.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six